System and method for card linked reward account

ABSTRACT

A system and method for a user to have a credit card, debit card, or stored value card that is linked to their reward points account in such a way as to permit them to pay for purchases with a merchant by using the card, wherein the merchant uses the existing credit card payment infrastructure as if payment were being made/authorized by a bank linked to the credit card or debit card account, but in fact the card is linked to the user&#39;s reward points account. In this manner, the user and merchant can use the reward points account to pay for purchases in a seamless manner whereby reward points are used for consideration rather than or as a supplement to cash and traditional credit.

BACKGROUND OF THE INVENTION

The present invention relates to electronic bartering systems that allowusers to trade or redeem reward points, such as those alreadyaccumulated in airline frequent flyer programs, into an account forredeeming products and services offered over the Internet. This wouldallow users to use their frequent flyer (or frequent car rental,frequent dining, etc.) points for products or services other than thosetypically offered by the point sponsor. The points would be sold back tothe airline (or other type of issuing entity). The system would alsoallow for purchase by users of points traded in by other users, suchthat points are redistributed without incurring a transaction directlywith the airline or other issuing entity. The system also allows formanufacturers and producers of goods to put overstocked or discontinued,end of run products into a liquidation process that can be exchanged forpoints.

In order to attract and retain business customers, airlines, hotels, carrental companies, chain retailers, telecom providers, etc. havehistorically introduced frequent use programs that offer awards of“frequent flyer miles” or other such incentives schemes based on thedistance traveled or use by that customer. Competition has forcedairlines to modify the manner in which mileage was acquired to includetravel related purchases by consumers. For example, the dollar-basedcost of a ticket purchased may be awarded as mileage to a clientaccount. Within the past several years, credit card companies or otherretailers and etailers have co-branded credit cards in the name of theairlines and the credit card company where each dollar spent using thecard is recorded as a mile of travel or point in the award program.These cards may additionally award bonus miles in coordination with userpurchases of preferred products or flights during preferred times.

U.S. Pat. No. 5,774,870, FULLY INTEGRATED, ON-LINE INTERACTIVE FREQUENCYAND AWARD REDEMPTION PROGRAM, issued to Netcentives, Inc. on Jun. 30,1998. The '870 patent provides a system whereby the user can makepurchase of products over the Internet and receive award points, whichare stored in an associated database. The user can subsequently view anaward catalog to determine which awards he may be able to redeem basedon the number of points in his account. This patent does not teach,however, the ability of a user to trade-in his points accumulated in apre-existing frequent flyer account in order to make purchases ofproducts from the award catalog or allow the points to be pooled withother programs in order to gain further purchasing power.

The ClickRewards program site appears to operate in the same fashion asthat described in the '870 patent; i.e. it allows users to gain points(called “ClickMiles”) for making an online purchase of a product throughan associated web site. For example, ClickMiles may be awarded for apurchase of Gap products at the Gap web site. The ClickMiles canultimately be redeemed for frequent flyer miles, for example at one ofseveral major airlines. Another web site, www.webflyer.com, isassociated with ClickRewards and provides ClickMiles for purchasingfrequent flyer-related goods, such as guidebooks.

The ClickMiles Reward Catalog allows the user to redeem the ClickMilesfor merchandise in the alternative to frequent flyer miles. For example,a CD can be obtained from CDNow by redeeming 900 ClickMiles.

Although the ClickRewards program allows a user to redeem accumulatedpoints for obtaining merchandise over the Internet, it does not allowfor the redemption of frequent flyer miles from a pre-existing accountto be traded for reward points.

U.S. Pat. No. 5,794,210, ATTENTION BROKERAGE, issued on Aug. 11, 1998 toCyberGold, Inc. The '210 patent describes a system that makes immediatepayment to a user for paying attention to an advertisement or other“negatively priced” information distributed over the Internet. A specialicon or other symbol displayed on a computer screen may representcompensation and allow users to choose whether they will view an ad orother negatively priced information and receive associated compensation.The points accumulated can then be used to purchase “positively pricedinformation” or products.

The CyberGold web site, www.cybergold.com, describes an “earn and spend”community in which users earn “cash” online, for example by visiting aportal site. The earnings can then be used to make online purchases,such as software.

Again, although the '210 patent and the CyberGold web site describe anincentive system that allows users to purchase products or services overthe Internet, neither teaches the ability of the redeeming frequentflyer miles from a pre-existing account for reward points.

U.S. Pat. No. 5,025,372, SYSTEM AND METHOD FOR ADMINISTRATION OFINCENTIVE AWARD PROGRAM THROUGH USE OF CREDIT, issued on Jun. 18, 1991to Meridian Enterprises, Inc. The '372 patent describes an incentiveaward program in which credit is awarded to participants based on theparticipant meeting a designated level of performance under the system.This patent does not teach the ability to increase the reward points ina user's account by redeeming points from a pre-existing account such asa frequent flyer mileage program.

With regard to FIG. 1, a model of the frequent flyer systems of theprior art is presented. Two different airlines servers are shownsurrounded by their related marketing partners, the first groupinglabeled Airline 1 100 and the second independently operated butfunctionally similar grouping labeled Airline 2 200. In order to luremore business travelers, the airlines 100, 200 have establishedmarketing agreements with travel related companies to provide thebusiness traveler with a more robust way to generate rewards in the formor frequent flyer miles. These marketing arrangements or associationshave typically involved credit card companies, phone companies, hotelchains and car rental companies. Any purchases made through these“co-branded” partners were then awarded to the user periodically. Bonusmiles or points may additionally be accumulated based on the user'sactions in response to offers made by the airline or in coordinationwith the partner company. For example, phone companies offer bonus milesto users based on the user's agreement to change phone service. Thesepoints are obtained by the partner companies by purchasing them from theissuing entity for redistribution as an incentive to utilize theirparticular goods and/or services. FIG. 2 shows some sample co-brandedcards that are representative of marketing agreements between TWA,Sprint, and Mastercard. In order to receive these benefits, the usermust sign up with each of the partner companies separately and providethe frequent flyer account number that is to receive the credited miles.A user either making phone calls or purchases in accordance with theagreements made with each of these partners will first accumulate avalue on the partner's system which in turn is periodically updated onthe airline server to reflect the value earned during that period. FIG.3 is representative of a typical user account that shows variousearnings in the system transferred in from any of the co-brandedpartners. The records of the table in FIG. 3 identify the source of therewards, the dates they were recorded and the number of miles associatedwith that transaction. The user can view the accumulated miles byaccessing the airline server or by tracking the individual valuereported to the user through the various bills the user receives fromeach of the co-branded partners.

The prior art does not provide for a consumer to utilize relativelysmall amounts of reward points in any manner. In addition, a consumeroften can only redeem points in an airline-related manner (i.e. toobtain a free ticket or upgrade from coach to first class). This priorart does not recognize the need for a consumer to exchange reward pointsfor non-travel related goods, and in particular renders relatively smallnumbers of points useless. For example, a consumer that does not traveloften may have 500 points in United Airlines, 700 points in USAir, and1000 points in TWA, each of which is relatively useless in the priorart.

What is desired therefore, is a system where users may submit frequentflyer awards or credits accumulated for other types of transactions forredemption or translation into a form readily acceptable by aparticipating merchant. An exchange rate will be established for therelative consideration received by the companies involved in thetransaction. A user should be able to pool the various earned rewardsthat may exist in currently separate server systems where the resultingcombined value may be used by a user of the system to acquire items ofequivalent value. In another embodiment, the award program looking toreduce frequent flyer liabilities may contact users and arrange for atransfer of the reward miles into a value (which may be predetermined)to be credited to the trading system reward. Alternatively, the pointsmay be bid for in an auction environment where points may be used to bidfor certain awards. A user who has earned frequent flyer miles orrewards on several sites insufficient to receive any direct value fortheir mileage may be able to pool the miles acquired from severaldifferent air carriers to transfer the awards accumulated to the systemof this invention. The user may have the selected items delivered to theuser by performing a purchase request by various means such as over theInternet, dialing a toll free number for placing an order, or any othermeans of placing an order that will accept payment from this system.

SUMMARY OF THE INVENTION

This invention allows a user to purchase goods or services usingaccumulated award points held by a variety of award programs. A frequentflyer program is typical of the systems to be encompassed by thisinvention. Tie-in promotions have been introduced over the past severalyears that have allowed purchases for goods and services such as hotelor car rentals to accumulate award miles that are then recorded on theairline award system. More recently credit card companies offer cardswhere a mile award is made for every dollar spent using that creditcard. These cards may additionally award bonus miles in coordinationwith user purchases of preferred products.

A system and method are disclosed where the system allows the user toredeem the accumulated reward points from a plurality of reward entitiesfor exchange with a merchant. The user requests process for redemptionof the pre-accumulated reward points comprises the steps of the userrequesting, via a user computer, a trading server computer to obtainreward points from a reward server associated with a rewarding entitywith which the user has reward points. The reward server computerdecreases the user's reward account by the requested number of rewardpoints. The reward server computer conveys consideration to the tradingserver computer, where the consideration corresponds to the number ofreward points decreased in the account of the reward server. The tradingserver computer increases the reward exchange account on the tradingserver associated with the user by the requested number of points. Thetrading server receives the consideration from the reward servercomputer. Following or anticipating this conversion into the tradingserver, the user requests a purchase of an item from an associatedmerchant computer by selecting the item to be purchased from a pluralityof available items. The trading server computer confirms that the user'sreward exchange account contains sufficient points to purchase theselected item. The user may purchase additional points in the event thathis account does not contain the requisite number of points for makingthe purchase transaction. The trading server computer requests themerchant computer to deliver the item to the user. The trading serverdecreases the user exchange account by the number of pointscorresponding to the purchased item and the trading server computerconveys consideration to the merchant computer equivalent to therequired points. In another embodiment, the user may redeem rewards atthe reward server following the selection of an item to be acquired.Policies may be established to automatically contact each of the rewardservers according to a user procurement profile to transact the requiredpayment. This profile may indicate the order of redemption and method ofproviding funds sufficient to cover the purchase after redeemable pointsare exhausted. After redemption the consideration is transferred to therespective merchant.

BRIEF DESCRIPTION OF THE DRAWING

FIG. 1 is representative of the prior art marketing arrangements used inreward programs;

FIG. 2 is a representation of the co-branded partners in a prior artaward program;

FIG. 3. is a sample of the prior art reward summary from an airlinefrequent flyer system;

FIG. 4 is a block diagram of the components of the present invention;

FIG. 5 is a block diagram of the system components of the presentinvention;

FIG. 6 is a data flow diagram of the process for a user to redeemrewards;

FIG. 7 is a data flow diagram of the user request for purchase of anitem at a merchant site;

FIG. 8 is a data flow diagram of the user account creation process onthe trading server;

FIG. 9 is a data flow diagram of the offer process by a reward programor by a merchant;

FIG. 10 is a data flow diagram of the process where a user may beredirected from a reward program to the trading server of the presentinvention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

With reference to FIG. 4, a plurality of reward server computers 10, 12,14, a trading server 20, a merchant computer 30 and a user computer 40are shown in communication with a network 2. The network may compriseany type of communication process where computers may contact eachother. The present invention will be described with respect to anInternet-based network where the reward server computer 10 is associatedwith an airline frequent flyer program. Any type of reward server mayalso be used in this system. The reward server computer may be a creditcard reward program such as offered by American Express where the userearns rewards based on purchases or an advertising based award programwhere the user earns rewards by selecting advertising content.

A user of this system may acquire and accumulate rewards through anyprior art means such as shown on FIG. 1, which are then posted in auser's reward point account 52 that is accessible through the rewardserver computer 10. The trading server computer 20 is in communicationthrough the network 2 with a user on a user computer 40 and isadditionally able to connect to the reward server computers 10,12,14through the network 2 in accordance with techniques well known in theart for Internet communications. The merchant computer 30 isrepresentative of any site that can communicate with the network thathas goods or services for sale or trade. The merchant may have a directrelationship with the trading server where the direct relationshipallows for a streamlined process for allowing a user to acquire productsoffered via the merchant computer. Alternatively, the merchant computermay be an independent merchant that does not currently have a profiledefined in the trading server that will accept payment from anothercomputer system in any one of well known e-commerce embodiments.

The rewarding entities may be any type of entity that has a service forallocating points or consideration for user actions. The reward servercomputers 10,12, 14 may be of any type of accessible server capable ofholding data about a user along with a corresponding earned value thatis negotiable for other goods, services, or points of another system. Inthe preferred embodiment, the airline reward server computer 10 mayrefer to one or several different airlines that have frequent flyerprograms or the like. The credit card reward server computer 12 mayrefer to any type and number of credit card server systems capable ofholding, increasing or decreasing a user's earned rewards acquiredaccording to the terms of the credit card program to which the user hasenrolled. The marketing reward server computer 14 may refer to one or amultitude of network accessible marketing systems that allow a user tohave an account where points or other redeemable value may be stored,updated and redeemed by a user. The trading server computer may be anytype of computer system that allows users to access the system in orderto perform the processes involved in this invention. In the preferredembodiment all of the systems described are accessible through theInternet and the user may freely navigate to any site by means wellknown in the art.

The present invention allows issuers who originally sold reward pointsin their program for use as an incentive by third parties to repurchasepoints at a substantial discount, thereby reducing their liability andallowing for a trading strategy that enables points to continually besold and repurchased. This may be a separate accounting procedure thanwhat is used for points that are granted.

The method of allowing the user to redeem the accumulated reward pointsfrom one or more of a plurality of reward entities will now be describedwith respect to FIG. 4 and the data flow diagram of FIG. 6. The tradingserver system would allow users to “log in” to access the functionalityprovided where the user may interact with applications, forms orcontrols. For example, the user may view his account information byusing a web browser to enter the appropriate identification informationand then select buttons, links or other selectable objects to navigateto the part of the system desired. If the user does not yet have anaccount (step 602), then the user may be enrolled per the flow diagramof FIG. 8 (step 604) as discussed below. The user, from the usercomputer, makes a request to the trading server computer 20 viacommunications flow 102 (step 600), requesting redemption through thenetwork 2 for a portion of the pre-accumulated reward points stored forthe user in one of the rewarding entities. A user's reward point account52 is associated with each of the reward servers but is only shown inFIG. 4 connected to the airline server for sake of clarity.Communications are made by the trading server 20 to the user computer 40via communications data flows 104. The user may interactively selectrewards to be redeemed, or the system may determine which rewards are tobe redeemed based on a previously defined user profile rule (step 606).The trading server computer 20 “obtains” the reward points from a rewardserver 10, 12, 14 stored in the user's account 52 by contacting theappropriate reward server via communication flow 110 (step 608)according to the user's requirements, by using the connection parametersas defined in a database 54 on the trading server as shown in FIG. 5. Inone embodiment, the trading server retrieves reward point accountbalance information via communications flow 114 (step 610) from thereward server for the user. In another embodiment, the trading servertransfers as part of the communication 110, the requested reward mileageto be redeemed (step 612). The reward server computer 10 decreases theuser's reward point account 52 by the requested number of reward points(step 614). The term point is used to reference any earned value thathas a cash equivalent or negotiable worth as in “frequent flyer” pointor mile. The reward server computer 10 conveys consideration to thetrading server computer 20 where the consideration corresponds to thenumber of reward points decreased in the user's account 52 on the rewardserver 10 (step 616). For example, the consideration may be in the formof a monetary credit to an account that exists between the tradingserver and the reward server, that gets paid at the end of a predefinedbilling cycle (i.e. every month). The trading server computer 20increases the reward exchange account 54 associated with the user by thereceived number of points (step 620). The trading server computer 20 inturn, receives the consideration from the reward server computer 10(step 618).

Similar communications are made between the trading server 20 and thecredit card reward server 12, as indicated by the data communications120 made by the trading server 20 to the credit card reward server 12and the data communications 124 made by the credit card reward server 12to the trading server 20. Likewise, communications are made between thetrading server 20 and the marketing reward server 14, as indicated bythe data communications 130 made by the trading server 20 to themarketing reward server 14 and the data communications 134 made by themarketing reward server 14 to the trading server 20. In each case, thetrading server 20 increases the user's reward exchange account 54 by thereceived number of points from the credit card reward server 12 and themarketing reward server 14, respectively.

In the second part of the transaction (see FIG. 7), the user from a usercomputer 40 may make a request 150 to purchase an item from anassociated merchant computer 30 (step 700). In the preferred embodiment,the merchant computer system will be a networked computer systemaccessible via the Internet. The user would visit the site by selectingon a link from the trading server's web site or by entering the name oraddress of the destination site. The user may identify one or many itemsto be acquired from one or several merchants 30. The user elects to payfor the desired item with points (step 702), and the user is“redirected” from the merchant server to the trading server at step 704.If the user does not have an account (step 706) then the user isenrolled per the flow diagram of FIG. 8 (step 708). The trading servercomputer 20 would confirm that the user has sufficient points topurchase the selected item by communicating with the trading server 20via communication flows 140, 144 in order to check the user's rewardexchange account 54 (step 710). If the user does not have enough pointsin his reward exchange account at the trading server 20, then theprocess of trading more points from the user's reward point account 52into his reward exchange account 54 is executed by branching to the flowdiagram at exit point A (step 712) which brings the process to the flowdiagram in FIG. 6 discussed above. After enough points are traded, theuser continues with the process from step 712 as shown in FIG. 7. Thetrading server computer 20 would request the merchant computer todeliver the item to the user. The user delivery information may beretrieved from the trading server computer 20 or may be supplied in someother manner. The trading server computer 20 would decrease the userexchange account 54 by the number of points corresponding to thepurchased item (step 714). The trading server computer 20 conveysconsideration to the merchant computer 30 equivalent to the cost of theitem by means well known in the art of electronic commerce (e.g. by apreexisting account, credit card, etc.) (steps 716, 718). In thealternative, the consideration may be a direct transfer of points to anaccount associated with the merchant. The merchant then completes thetransaction at step 720, for example by delivering the purchased item.

Policies and profiles may be established to automatically contact eachof the reward servers according to a user redemption profile (see FIG.5) to transact the required payment for an item selected by a user. Thisprofile may indicate the order of redemption and method of providingfunds sufficient to cover the purchase after redeemable points areexhausted. For example, if a user has a preferred air carrier where theuser would like to retain mileage in that reward system, the user mayspecify a priority of use indicating the reward resources that should beexhausted prior to accessing the most desirable rewards. Following theselection of an item to be acquired, the server may contact all of thereward resources according to this profile to selectively redeem each asrequired to meet the purchase price. The process may be performed inreal time or as a background process where the user may select how thetransaction should proceed. If the user exhausts lower personal worthresources from the reward servers, the system may be required to contactthe user before the transaction is allowed to proceed to redeem points.A classification system may also be used to indicate rewards of similarworth. If for instance, a frequent flyer program supports multipleclassifications of miles that may be redeemed differently, the user mayoptionally define how those resources should be managed duringredemption. The redemption process would then honor those rules electedby the user to select from several different reward programs instead ofredeeming rewards strictly on a value required from the first rewardprogram contacted.

FIG. 8 describes the process steps involved in enrolling a user toutilize the trader server. The user accesses the trading server 20 atstep 800 and selects an option to create a user account at step 802. Thedata entered by the user may be used in determining whether a userallows unsolicited offers to be presented from the trading server. Theuser's preferences for manufactured goods services, products, traveldestinations, hobbies, interests or any other user entered criteria maybe stored in the database for subsequent use by the system (steps 804and 808). The trading server has the ability to receive offers fromreward servers or merchants (steps 806 and 808) which may then bedirected to users based on the database profile information provided bythe user (see FIG. 9). At step 900, the reward server contacts thetrading server with an offer to redeem points. Similarly, a merchant maycontact the trading server with an offer to be distributed to members(step 902). The trading server records the offer in a database (step906), and the trading server may record a limited conversion rate in itsdatabase (step 906). The reward server may then contact the user with anoffer to redeem at step 908. Optionally, the process may branch to theflow diagram in FIG. 6 discussed above (step 910).

The trading server may also be contacted in response to a button orhyperlink located on a web page accessible by the user from the airlinereward server (FIG. 10, steps 1000 and 1002). The process may continueto that described with respect to FIG. 6 for trading points into areward exchange account (step 1004). In a similar manner, hyperlinks orcalling routines may allow a user to access a reservations system ormerchant from the trading server. The link would direct the user topartner or associated air carriers where the points in a user exchangeaccount on the trading server 20 may be used to acquire reduced fareflights.

The system used to implement the aforementioned method will now bedisclosed with respect to FIG. 5. The system is comprised of a tradingserver computer connected to a network of computers where a userinterface is established whereby a user from a user computer may accessthe server to request the transaction to contact a reward servercomputer system. In the preferred embodiment, the server has memorymeans for storing the user account information, user profiles and rulesspecified by the user, system, or merchant. The trading server also hascommunications means to allow users to access the server and to allowthe trading server to contact reward servers and processing means tointerpret the rules and coordinate the contact to the respective rewardservers. The processing means is adapted to allow the user to requestand exchange consideration for rewards from reward servers. Theprocessing means additionally is adapted to coordinate the exchange ofconsideration and increase or decrease the user exchange accounts storedin memory in response to actions performed by the user computer, rewardserver and merchants.

In the preferred embodiment, the memory means comprises a databasestructure that is used to record the transactions associated with thepreviously described method. Records indicating the changes and currentvalue of user exchange accounts are updated according to the requestprocessed by the processor.

In response to a request for redemption, the trading server looks up thecontact properties of the reward server to be contacted. The userinformation is submitted to the reward server to display the availablepoints that may be redeemed. In another embodiment, the requestadditionally contains a value to be redeemed. The processor establishesa communication link with the reward server and a transaction request issent to the processor of the reward server. The processor of the rewardserver may perform actions that may allow or refuse the requestedaction. In another embodiment, the trading server processor may begranted direct authorization to modify the user's records in the rewardserver database without analysis by the processor of the reward server.A conversion rate may be applied to the transaction such that the rewardserver reduces the available rewards in the user's account. The rewardserver then transfers consideration to the trading server thatcorresponds to the value reduced in the reward system. In response tothe receipt of the transfer or approval of the transfer, the tradingserver increments the user account balance to reflect the receivedconsideration and the connection to the reward server is dropped. Atransaction log may be used to record each of the transactions in case areconciliation process is required at a later time. The increase in theuser's exchange account may then be stored until a user finds an item tobe purchased.

The user selects the desired object from the merchants by indicating thetype of product or service to be procured. In one embodiment, thetrading server contacts the merchant server to return to the user a listof products that match the user's search criteria or if the user hadspecified in detail what was desired, the product may be directlyacquired from a merchant. A communication link is established betweenthe trading server and the merchant computer or designee for e-commerce.Direct acquisition may be enacted by contacting the merchant computerand supplying the user indicia, the product indicia, and the redemptionvalue sufficient to secure the transaction. In response to thetransaction request, the merchant computer will receive theconsideration supplied and contract for the delivery of the product. Inanother embodiment, the consideration required for the item selected issent to the trading server where based on the available points in theuser's exchange account the trading server will determine whether theconsideration is available. An authorization process may be incorporatedat this point to request authorization from the user or in a moresimplified process, the consideration will be transferred to themerchant computer and the user's exchange account will be reduced. Themerchant computer will receive the consideration and will effectuate adelivery transaction to be issued.

The goods may also be placed under direct control of a distribution armof the trading service so that the user places the order with thetrading service directly and the merchants are not directly involvedwith the sale of the goods.

Thus, the present invention provides a liability management system forissuers of reward points, which allows them to take points off the booksand eliminate them, if desired, at a discount rate. This system enablesthe sale or repurchase of points with a trading strategy in which pointsneed not expire.

The present system may be implemented by means of a smart card whereinfrequent use points may be accumulated on the user's card every time thecard is used for associated application. For example, if a user uses hissmart card to pay for a hotel that normally gives reward points, thosereward points may be stored on the smart card. Likewise, when the cardis used for the purchase of an airline ticket, the points would be addedto the smart card. The user may then redeem the accumulated rewardpoints by inserting the card into a vender associated with a computerconnected to the Internet. The trading process proceeds as describedabove, except that the points are obtained directly from the smartrather than a reward server.

The user may have a credit card, debit card, or stored value card thatis linked to their points account in such a way as to permit them to payfor purchases with a merchant by using the card, wherein the merchantuses the existing credit card payment infrastructure as if payment werebeing made/authorized by a bank linked to the credit card or debit cardaccount, but in fact the card is linked to the user's points account. Inthis manner, the user and merchant can use the points account to pay forpurchases in a seamless manner whereby points are used for considerationrather than or as a supplement to cash and traditional credit.

Other aspects of this invention will now be disclosed that will enhancethe reader's understanding of the application of this invention.

The user can purchase points from the system, borrow points from thesystem, etc., and basically treat the points as cash consideration forpurposes of such transactions.

The system can prioritize the order of points being traded based on apredetermined set of rules such as in higher value points being issuedbefore those with a lower value.

Merchandisers also benefit from the use of this system where anothermarketing channel is afforded for products that are often purchased byfrequent travelers with high disposable income. Products and servicesencompassing jewelry, flowers, limousine transport, timeshare rental maybe exchangeable for points stored in this system. Items purchasedthrough the system may also be paid for by a combination of points andcurrency which might be the case when a user does not have enoughaccrued points to meet the purchase consideration of an item selected.

It is anticipated that high quality limited access products may benefitfrom the distribution methods afforded by this system. For example,companies like DeBeers and Chanel may take advantage of thisdistribution means without impacting the level of quality or excellenceassociated with their products.

Manufacturers can discount or liquidate goods for points in a mannerthat doesn't negatively affect the perceived value of the goods (i.e.not in direct competition with the mainstream sales). That is, themanufacturer can place overstocked, end of run type goods and the like,place them in the chain of distribution for exchange with points, andnot be in direct competition with cash sales of its mainstream products.

Resort destinations that are managed by property management companiessuch as RCI may be integrated into this system where instead of tradingaccommodations with only those having similar property, it is nowpossible that the rental of the property may be achieved by conversionfor points.

Offers may be distributed to users of this system where substantialrebates or reduced rates are described in the offer. Time sensitiveproduct offerings can also be accommodated in the system where the valueof the product is decreased according to a life span of the product.Time sensitive product offerings such as food products or concerttickets can have an associated diminishing or escalating value based onthe length of the offer.

Using this system it is now possible to coordinate the products ofseveral different providers into one package. A user of this system maytherefore select an airline, hotel, car rental and Broadway show ticketsin New York, individually or in a prepared package from one location bytrading points where the package may not have existed before where thetrading system coordinates all aspect of the transaction and reduces theuser's exchange rewards in a corresponding manner.

Other purchasing leverage not specifically addressed previously may alsobe acquired by combining the power of a pool of high profile users ofthis system where these users may be allocated access to products orservices not generally distributed to the remainder of the system users.Points collected in the system by these users may afford them access tolimited distribution channels where higher discount levels or premiumluxury products may be acquired. Direct access to cartel products suchas diamonds, duty free items and other restricted access product orservice offerings are also accommodated through the coordination of thetrading server with these specialized service and product providers. Forexample, a preferred client distribution channel such as found in aEuropean market for luxury goods would be made available to users ofthis system where the prices for the objects in this preferred channelmay be significantly lower than retail for objects that are typicallyreserved for limited distribution at premium prices. The trading servermay additionally have exclusive rights to allocate access to certainpremium products, services, events, travel destinations oraccommodations in accordance with any right or grant permitting suchallocation to any user of the system. A distribution channel may makeavailable exclusive products for all or a limited amount of the membersof the system where the trading server system controls access to theoffer.

Parameters associated with the available quantity, duration, exchangerates, etc. may be input into the system to be used in the allocationalgorithm to restrict the offer. Upon user access, the trading serverwould, in these cases, modify the premiums offered to reflect theimmediately attainable items for the current user and may additionallydisplay or provide access to premiums that may be acquired throughpayment by other means (i.e. cash, charge, debit) to make up thedifference between the user's available points and the points requiredto accept the offer.

In another embodiment of this invention, airlines seeking to providehigher levels of personalized service for their business travelers willprovide access to the Internet or access to in-flight services such asvideo games, for a fee or in place of granting mileage rewards ontranscontinental or transatlantic flights. Access to video games may beafforded to the traveler where the availability of different gamesdepends on the number of reward points traded in by the traveler. Therewards may be converted using the trading server of this invention,where the user may opt to forego collecting mileage in return foraccessing on-board entertainment provided in a standalone mode or in alinked mode. For example, users may select to play video games, accessthe Internet or utilize Email via a seatback or tray table mountedinterface and controller. The user may optionally connect a laptopcomputer to an interface port of the aircraft using an Ethernet,parallel, USB connection or proprietary connector provided by the aircarrier. In the preferred embodiment, the user would select theconnection speed and type for communications based on whether in-flightor external services were to be accessed. Other types of businessservices may additionally be used and accounted for, such as usingnetwork printers or fax equipment. RF, satellite or microwave basedcommunications may be used for real time communications where sufficientgeographical coverage is provided.

The interface would allow a user to login using the frequent flyeraccount information or preferably, the trading server account login idand password, where the user may use points awarded from another aircarrier or point server to “pay” for the services accessed. The accountbalance from the trading server may be transferred to the localcontroller prior to takeoff for each user that logs in to the tradingserver. Once the plane has departed, depending on the linking or accesscapability afforded by the air carrier or service provider, the user'saccount may be modified in real time or upon reconnection followinglanding, based on services selected by the traveler. If a real time linkis supported, the user's exchange account may be periodically debitedaccording to the services selected and duration of use.

In another aspect of the invention, an electronic bartering system isimplemented, wherein product manufacturers, producers, distributors,etc. can provide surplus or overstocked goods for liquidation into thechain of supply of the system and exchange then for points as describedherein. This provides an inventory management and liquidation system forthese manufacturers and sellers.

In addition, the value of the reward points may fluctuate as a functionof the company's performance, which may be measured by reference to theprice of its stock, revenue, earnings, or some other parameter that isagreed to that reflects the relative performance of the company. In thismanner, companies that perform well would provide an additionalincentive to a user for using their frequent use program rather than acompetitor's program. For example, all other parameters being the same,a user would likely choose the Acme credit card company over the Betacredit card company when the user determines that the Acme companyperformance results in a 10% increase in the number of points otherwiseearned by using its credit card. The value may also fluctuate as afunction of the number of points outstanding or the desirability of theissuer to reduce its liability or make it more robust.

1.-30. (canceled)
 31. A method of executing a purchase transaction usingreward points as payment for an item, comprising: A) a user earningreward points by the steps of: the user executing a plurality of firstpurchase transactions using a credit card linked to a credit card rewardprogram of a first reward issuing entity, each of the first purchasetransactions earning a first set of reward points of a first type fromthe first reward issuing entity; a reward server computer, associatedwith the first reward issuing entity and comprising a plurality ofreward accounts, each of said reward accounts associated with adifferent user, storing each of the first sets of reward points of thefirst type in one of the plurality of reward accounts on the rewardserver computer associated with the user; a reward exchange computerstoring in a reward exchange account a second set of reward points of asecond type earned by the user as a result of a second transactionexecuted between the user and a second reward issuing entity which isdifferent from the first reward issuing entity; B) implementing a rewardpoint exchange by the steps of: the reward exchange computer providing aweb page to a selected one of a plurality of user computers, theselected user computer associated with the user, the web page comprisinga control for initiating communication over a computer network betweenthe reward exchange computer and the reward server computer; the rewardexchange computer receiving from the user operating the user computer aselection of the control from the web page and, in response, initiatingcommunication over the computer network with the reward server computerto exchange a quantity of reward points of the first type, designated bythe user operating the user computer, from the reward account on thereward server computer into reward points of the second type for addingto the reward exchange account on the reward exchange computer wherein:the reward server computer decreases the quantity of reward points ofthe first type designated by the user from the reward account on thereward server computer, the reward exchange computer converts thequantity of reward points of the first type decreased from the rewardaccount on the reward server computer into a corresponding amount ofreward points of the second type at a predetermined reward serverconversion rate, adds the corresponding amount of reward points of thesecond type to the reward exchange account, and combines thecorresponding amount of reward points of the second type added to thereward exchange account with the second set of reward points of thesecond type previously stored in the reward exchange account, and thereward server computer conveys consideration to the reward exchangecomputer, the consideration having a value equivalent to the quantity ofreward points of the first type decreased from the reward account on thereward server computer; and C) the user executing a purchase transactionusing reward points as a payment means comprising the steps of: the usermaking a payment request to purchase an item at a purchase price from amerchant via a merchant computer in a purchase transaction, wherein themerchant is a different entity than the first reward issuing entity andthe second reward issuing entity; the user electing to pay the purchaseprice for the item using some of the combined reward points of thesecond type stored in the reward exchange account on the reward exchangecomputer that is interconnected to the merchant computer via thecomputer network; the reward exchange computer confirming that the userhas enough combined reward points of the second type in the rewardexchange account for payment of the purchase price; the reward exchangecomputer redeeming combined reward points of the second type for thepurchase transaction by decreasing the reward exchange account by aquantity of combined reward points of the second type corresponding tothe purchase price for the item being purchased; and the reward exchangecomputer conveying monetary payment to the merchant computer in anamount equal to the purchase price.
 32. The method of claim 31, whereinthe payment request comprises information for a portable token linked tothe reward account and presented by the user to the merchant computerfor payment in the purchase transaction.
 33. The method of claim 32wherein the portable token is a credit card.
 34. The method of claim 32wherein the portable token is a debit card.
 35. The method of claim 32further comprising the step of using a credit card infrastructure withthe portable token to link to the reward account.
 36. The method ofclaim 35 wherein the credit card infrastructure comprises the servercomputer with the reward account.